A reference letter and the related administrative burden in having this kind of document always wet-signed shared as a hard copy, sounds very old-school. Most German organization spend a lot of resources to create and deliver reference letters in a very ineffective way.
Following the trend of digitalization, the HR department should also foster any activity to get the reference letter document on a digital layer. The question, if reference letters are useful in general is absolutely valid and should accompany the whole HR transformation process.
German Law obligation incompatible with HR Digitalization?
Any German company which would decide to stop the reference letter production will get in trouble soon. Every employee has the legal right stated in law to receive a reference letter wet-signed as a hard-copy. Welcome to the 21st century.
From an organizational point of view, there are some options to invest fewer resources in a more efficient way. A proper streamlined approach from a workflow perspective to loop in the line manager for the employee performance rating is a good starting point when it comes to a robust business process. Some companies also push the reference letter text proposal to the employee directly for several reasons.
All in all, at the end the reference letter is mostly ending up in HR for signature and delivery. Coming back to German Law. It is forbidden to send the reference letter in an electronic form (e.g. email).
The reference letter must be prepared in a written form. The electronic form is expressly excluded.
– German Law § 109 Abs. 3 GewO (freely translated)
From an efficiency and handling perspective, the delivery of a reference letter digitally would be a big plus for the employer and also the employee. Todays‘ application processes are mostly fully digitalized. Therefore an already digital shared document must not be scanned once more to be uploaded to an application system. Especially the younger generation would favor a digital delivery of a reference letter.
Why not follow this approach in taking a minor legal risk? If there’s no claimant, there’s no judge. The worst case scenario would be that an employee can persist on his right to have a hard-copy available. From an experience point of view, this might happen not quite often. But why should HR always stick to the paper-based process holding back the digital revolution due to the minority of such cases?
HR cannot change laws but can take a certain level of risk
One major analysis in this context is a pure financial cost-effectiveness calculation. How much would HR save in case of digital creation and delivery of a reference letter vs. the old school paper-based approach? Next to the material costs (postage, paper, envelope etc.) also include costs from a workforce perspective. This is mainly the time after the document is created and send to the printer until the final envelope is put into the post box. Don’t restrict such efficiency gainer thoughts to the delivery of reference letters itself. How does HR collaborate with the line management? Is this already standardized, even automated? Why does HR need to have people sitting there sending emails back and forth with the aim to produce such non-value adding document?
If it is worthy enough, the HR Services management team should sit with some stakeholders such as Legal HR, Works Council (if existing) and also shouldn’t hesitate to include their employees‘ opinion through a survey. Business must expect a valuable risk and compliance assessment in collaboration with the Legal team. Discuss the potential risks and potential claims the organization could face in the future with the optimized process. There is no ONE way to digitalize the reference letter process.
What’s next?
Are you interested to digitalize your reference letter document or also other HR documents? Simply let me know. I can support you to create the risk assessments incl. the financial impact of the decision making. Let’s bring the digitalization to your organization!
Please contact me: oliver@hr-digital-now.de
